The Aladdin Carpet Store has a customer demand that is normally distributed with an average daily demand of 30 meters and a standard deviation of 5 meters per day. The lead time for receiving a new order of carpet is 10 days. The store wants a service level of 95%, representing a probability of stockout equal to 5%. 1. What size of safety stock should the company keep ? 2. What is the reorder point?

The Aladdin Carpet Store has a customer demand that is normally distributed with an average daily demand of 30 meters and a standard deviation of 5 meters per day. The lead time for receiving a new order of carpet is 10 days. The store wants a service level of 95%, representing a probability of stockout equal to 5%. 1. What size of safety stock should the company keep ? 2. What is the reorder point?

Name: The Aladdin Carpet Store has a customer demand that is normallydistri
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Description: The Aladdin Carpet Store has a customer demand that is normallydistributed with an average daily demand of 30 meters and astandard deviation of 5 meters per day. The lead time forreceiving a new order of carpet is 10 days. The store wants aservice l

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
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A company stocks an SKU with a weekly demand of 225 units and a lead timeof 3 weeks. Management will tolerate one stockout per year. If sigma for the leadtime is 175 and the order quantity is 800 units, what is the safety stock, the averageinventory, and the order point?
The demand for a commodity is 40,000 units a year, at a steady rate. It costs $20 to place an order, and $0.40 to hold a unit for a year. Find the order size to minimize inventory costs, the number of orders placed each year, the length of the inventory cycle and the total costs of holding inventory for the year. What is the EOQ? What is the number of orders placed each year? What is the inventory cycle (length of time that the the order size will last)? in terms of weeks What is the total ordering & carrying costs at the EOQ level?
EOQ, reorder point, and safety stock Alexis Company uses 937units of a product per year on a continuous basis. The product has a fixed cost of $44 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity.